Trafco inside pages

Growing with harmony

2011A N N U A L R E P O R Twww.trafco.com

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www.trafco.com

2 0 1 1يــر لتقــــــر االســـنــــوي

نــمـــــــــو مـــــتــنــاغـــــــــم

الشـركة العـامـة للتـجارة وصـناعـة اغذيـة ش.م.ب.

P O Box 20202, Manama Kingdom of Bahrain Telephone: 17 729000 Fax: 17 727380www.trafco.com

ص.ب 20202، الــمـنـامـةمـمـلـكة البحـرين17 7 2 9 0 0 0 هاتف: فاكس: 727380 17

www.trafco.com

His Royal Highness Prince Salman Bin Hamad Al KhalifaThe Crown Prince and Deputy Supreme Commander

His Royal MajestyKing Hamad Bin Isa Al KhalifaThe King of the Kingdom of Bahrain

His Royal HighnessPrince Khalifa Bin Salman Al KhalifaThe Prime Minister

The company is guided by the following core values in its endeavour to realise its corporate vision:

T eamwork

R el iab i l i t y

A ccountab i l i t y

F a i rness

C ommitment

O pt imum Va lue

To ensure customer satisfaction by delivering superior quality products, the highest level of service and diverse range of world-leading brands at the most competitive prices, thus, establishing ourselves as the premier Food Company in the GCC.

Vision

Values

Seamless synergy pioneering new levels of success & growth

Company Profile

3 decades of exceptional service

General Trading & Food Processing Company B.S.C (TRAFCO) was incorporated in the year 1977 as a public joint stock company as a part of an initiative to revolutionize and rejuvenate the Food industry of the Kingdom of Bahrain. The Company was successfully turned into Public Share Holding Company with initial public offering in 1980’s and is listed in Bahrain Bourse. In the last 3 decades the company en route to success has achieved several milestones and has earned itself the reputation of being one among the best in the FMCG industry. Born out of a vision to be at the forefront of the food industry, TRAFCO is today a household name synonymous with some of the finest food products in the world. Moreover, being one of the oldest food conglomerate in Bahrain, it has gained trust and admiration for its commitment to quality, value and service excellence.

Serving Bahrain with the best from across the globe

The core business of the parent Company is Import & Distribution of Food & Non Food products and with annual sales turnover of US$ 105 million, TRAFCO is one among the largest & biggest Fast Moving Consumer Goods Conglomerate in Bahrain with an extensive range of products comprising of canned, chilled, frozen & dry food & non-food products, general commodities, fresh fruits and vegetables as well as livestock imported from countries such as Australia, Brazil, Europe, the Far East, India, UK, USA, besides Arab and Middle Eastern countries. With stringent and reliable quality control systems in place, TRAFCO continues to introduce many world renowned brands with the assurance of excellent quality and exceptional service.

Success through synergy

As part of its vision to become a dominant player in Food industry, Trafco is propelling its expansion through organic and inorganic growth. Trafco has invested in developing the food industry of Bahrain by acquiring BWBB & BFFC, and has invested in Trafco Logistics Co. (TLC) and by owning majority stake in Awal Dairy Company W.L.L., Bahrain National Cold Storage Company (BANZ) and Bahrain Livestock Company. To serve Bahrain’s objective of economic integration among GCC countries, TRAFCO has established Qatari Bahraini Food Trading Company (QBC) jointly with Qatari investors, with equal shareholding for import and distribution of Food & Non Food products, Kuwait Bahrain Dairy Co. established in 1992 is wholly owned subsidiary of Awal Dairy catering to Kuwait & Iraq.

BWBB: Bahrain Water Bottling & Beverages, 100% subsidiary of Trafco is an ISO 9001:2000 certified Company. BWBB is one among very few companies in Bahrain that are into manufacturing and bottling of mineral water with strict adherence to quality control. BWBB is the market leader in water bottling industry and TYLOS is the brand leader in the segment in addition to other brands like Salsabil & Delta.

BFFC: Bahrain Fresh Fruits Company, a pioneer in food industry was acquired in the year 2009 and is 100% subsidiary of Trafco. The Company was incorporated in the year 1998 and with its state-of-the -art infrastructure along with a dedicated & committed workforce has become a dominant player in FMCG sector with annual sales exceeding US$ 9 million. BFFC is very active in 2 core food businesses - one being import and distribution of Fresh Fruits & Vegetables and other, import and distribution of Frozen, Chilled & Dry Food & Non Food products. Our Fruits & Vegetable division is one among the

biggest in Bahrain with largest banana ripening chambers, few of the brands to reckon with in FMCG divisions are Tilly-Sabco chicken, Rezende chicken from Sadia, Frico Cheese from Friesland, Bridel from Lactalies Europe, Siblou, Delmonte and Chiquita brand banana added recently.

Metros: Metro Markets Co. is 100% owned and is the retail wing of Trafco. Spanning across various parts of Bahrain, Metro is undoubtedly one of the most rapidly expanding supermarket chains in the Kingdom. Metro known for their strict adherence to quality control and standards, have been over the years, patronized by discerning customers who value superior products and services.

Trafco Logistics: Trafco Logistics Co. which commenced its operation from May 2010 is conveniently located in Galali. The US$ 14 million logistics complex is a wholly owned subsidiary of Trafco which is focusing on 3PL. This state-of-the-art logistic facility with sophisticated technology and exceeding 20,000 cubic meter space with Frozen, Chilled and Dry facilities located in close proximity to the Airport and the new Seaport has propelled Trafco into the elite group of logistic solution providers in Bahrain.

Awal Dairy: The first dairy Company in Bahrain to be incorporate in the year 1963, Trafco holds 51% share holding in Awal dairy. The Company is ISO 9001:2000 certified and adheres to international food and safety standards. Latest technology, innovative & excellent products, proficient manpower, sophisticated logistics and outstanding customer care have made Awal Dairy the market leader in Bahrain. Awal Dairy offers novel range of Fruit Juice & Drink, Fresh milk under brand name Noor, UHT Milk under brand name Awal and Fabion Ice creams in addition to other value added products. Awal Dairy is the first in the Arabian Gulf and second in the world to invest in Tetra Brick Aseptic 1000ml slim pack with re-cap system. The Company with a workforce of more than 245 people and with combined production capacity exceeding 200,000 metric tons is one among the biggest in the GCC region.

QBC: Qatari Bahraini Food Trading Company, a joint venture between Trafco & Qatar Meat & Live Stock Co., with a paid-up capital of US$ 3 million was formed in the year 2008 with a single minded objective of providing the best Food & Non Food products from around the world at affordable price to consumers in Qatar.

BLSC: Bahrain Livestock Company was formed by the Government of Bahrain with single minded objective of providing meat at reasonable price to Bahrain’s population. The Company started its operations in 1983 and successfully got privatized in the year 2000 with Trafco acquiring major shares in the Company. BLC imports chilled meat and livestock from Australia which are slaughtered in well equipped in-house slaughter houses in the most hygienic and healthy way. BLC is the only company allowed to import live stock and the prices are supported with government subsidies.

Glimpse of the future

Success, as we all know, is not the destination but an on-going process. We, at TRAFCO, strongly believe in this philosophy. Reason why, the company is all set to expand further in the future, thus, underscoring the management’s objectives to serve not only the local market but also across the GCC region.

4 TRAFCO ANNUAL REPORT 2011

General Trading and Food Processing Company B.S.C.

Quality - Always An Assurance

Authorised Capital BD 10,000,000

Issued and Paid Up Capital BD 8,067,505

Board of Directors

1) Ebrahim Mohamed Ali Zainal Chairman

2) Yousuf Saleh Al Saleh Vice Chairman

3) Khalid Abdulrahman Almoayed Director

4) Dr. Esam Abdulla Fakhro Director

5) Ibrahim Salahuddin Director

6) Sami Mohammed Jalal Director

7) Jehad Yousif Amin Director

8) Abdul Reda Mohamed Aldaylami Director

9) Ali Yousuf Abdulrahman Engineer Director

10) Fouad Ibrahim Kanoo Director

Executive Management

S. Sridhar - Acting General Manager (from 1st Jan 2012) 17 725897 [email protected]

V. Sundar Rajan - Ex. Group General Manager (till 31st Dec 2011)

Sameer A. Alkhan - Assistant General Manager 17 723343 [email protected]

Hussain Buchiri - Human Resources Manager 17 825314 [email protected]

Azzam Moutragi - Sales Manager 17 723524 [email protected]

Ali Ramadan Nasser - Stores Manager 17 729410 [email protected]

Prasanth P.J. - Purchase Manager 17 725780 [email protected]

P. Suresh Menon - IT Manager 17 723692 [email protected]

Tharol Soma Rajan - Finance Manager 17 827059 [email protected]

Kakkati Narayanan - Catering Manager 17 257969 [email protected]

Francisco J. Sequeira - Maintenance Manager 17 729000 [email protected]

Group Companies

S. Mukherjee - General Manager, Bahrain Water Bottling & Beverages Co. S.P.C. 17 336700 [email protected]

Anwar Sadath - General Manager, Bahrain Fresh Fruits Co. S.P.C. 17 470935 [email protected]

Sathyan Das - Retail Operations Manager, Metro Markets S.P.C. 17 813007 [email protected]

Yousif Khursheed - Logistics & Warehouse Manager, Trafco Logistics Co. S.P.C. 17 478460 [email protected]

5TRAFCO ANNUAL REPORT 2011


Other Departments

Sales Department 17 727208

Accounts Department - Head Office 17 827059

Fresh Fruits & Vegetables Division - Central Market 17 276603

Accounts Department - Central Market 17 276603

Banks

1) National Bank of Bahrain (B.S.C.)

2) Bank of Bahrain and Kuwait (B.S.C.)

3) Bahrain Islamic Bank (B.S.C.)

4) Ahli United Bank Bahrain (B.S.C.) (c)

5) Bank Muscat International

6) Standard Chartered Bank

7) BNP Paribas

8) Ithmaar Bank

9) Kuwait Finance House

10) Mashreq Bank

Subsidiary Companies Place of Effective Ownership Incorporation Interest

1) Bahrain Water Bottling & Beverage Co. S.P.C. Bahrain 100%

2) Bahrain Fresh Fruits Co. S.P.C. Bahrain 100%

3) Metro Markets Co. S.P.C. Bahrain 100%

4) Trafco Logistics Co. S.P.C. Bahrain 100%

5) Awal Dairy Co. W.L.L. Bahrain 51%

6) Kuwait Bahrain Dairy Co. W.L.L. Kuwait

(98% Owned By Awal Dairy Co. W.L.L.)

Associate Companies Place of Effective Ownership Incorporation Interest 1) Bahrain Livestock Company B.S.C. (C) Bahrain 33%

2) Qatari Bahraini Food Trading Co. L.L.C. Qatar 50%

3) Saudi International Dairy Co. Saudi Arabia 50%

(50% Owned By Awal Dairy Co. W.L.L.)

TRAFCOLOGISTICS



Board of Directors



1. Ebrahim Mohamed Ali Zainal Chairman

2. Yousuf Saleh Al Saleh Vice Chairman

3. Dr. Esam Abdulla Fakhro Director & Executive Committee Member

4. Khalid Abdulrahman Almoayed Director & Executive Committee Member

5. Fouad Ibrahim Kanoo Director

6. Ali Yousuf Abdulrahman Engineer Director

7. Ibrahim Salahuddin Director

8. Jehad Yousif Amin Director

9. Sami Mohammed Jalal Director

10. Abdul Reda Mohamed Aldaylami Director

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Trafco Executive Management

Standing from Left to Right

Tharol Soma RajanFinance Manager

P. Suresh MenonIT Manager

Ali Ramadan NasserStores Manager

Azzam MoutragiSales Manager

Hussain BuchiriHuman Resources Manager

Kakkati NarayananCatering Manager

Prasanth P. J. Purchase Manager

Francisco J. SequeiraMaintenance Manager

Sitting

S. Sridhar (Right)Acting General Manager

V. Sundar Rajan (Centre)Ex. Group General Manager

Sameer A. Alkhan (Left)Assistant General Manager



Group Companies Management

V. Sundar RajanEx. Group General Manager

Sathyan DasRetail Operations ManagerMetro Markets S.P.C.

Anwar SadathGeneral ManagerBahrain Fresh Fruits Co. S.P.C.

S. Mukherjee General ManagerBahrain Water Bottling & Beverage Co. S.P.C.

Yousif KhursheedLogistics & Wharehouse ManagerTrafco Logistics Co. S.P.C.



The year 2011 experienced conditions that were politically and economically unstable in the Middle East and North African region. The global economy struggled to recover with the continued financial difficulties in many countries, especially the countries in the Euro zone. As a result of these unfavorable conditions, the commodity prices were adversely affected in the global market. The prices of most commodities increased in the first quarter of the year, which in turn reflected negatively on the stocks and forced companies to liquidate them at lower profit margins or below cost.

At the same time the Kingdom of Bahrain was affected as a result of the deplorable conditions experienced during the first quarter of the year. These conditions negatively impacted the overall business activities and the flow of daily trade activities. In spite of these complex circumstances encountered, the group has managed to achieve total sales of BD 39.7 million for the fiscal year, 6% up from the previous year which was BD 37.3 million. The net profit for the group amounted to BD1.64 million compared to previous year profit BD 1.44 million, an increase of 13%. Awal Dairy Company W.L.L (ADC)ADC achieved good profits in the first 9 months of 2011 but because of the increasing prices of raw materials, the decline of world prices coupled with intense competition in the dairy and juice industry in the last quarter of the fiscal year, the company incurred heavy losses. These factors affected the overall profitability of the company for the entire fiscal year. The total sales for the year reached to BD13.4 million, slightly lower compared to the previous year figure of BD 13.6 million. Our 51% share of the net loss amounted to BD 89K this year compared to previous year’s profit of BD 298K. Bahrain Fresh Fruits Company S.P.C (BFFC)The company’s management strategically diversified its imports and goods and managed to acquire agencies specialized in banana trade such as Chiquita and Delmonte. But in the second half of the fiscal year, Philippines was struck with unfortunate floods and earthquake. Due to these natural disasters the volume of bananas imports depleted and this in turn adversely affected the company’s business. However in general the company managed to improve its performance and the losses declined from BD 367K in the previous year to BD 210K in 2011. The total sales of the company decreased by 9% from BD 3.5 million to BD 3.2 million during this financial year. Bahrain Water Bottling and Beverage Company S.P.C (BWBB)The total sales of BWBB was BD 1.23 million in 2011 as against BD 1.28 million in the previous year, a decline of 4%. This decline was as a result of the increased cost of maintenance and the shutdown intervals during the maintenance period. To account for the increase in capital expenditure, the Board reconsidered the useful lives and depreciation period of the plant and machinery which resulted in a higher depreciation provision in the current year. The company incurred losses this year of BD100K compared to previous year profits of BD 41K.

With a decree announcing the ban of the export of bottled water by the Kingdom of Saudi Arabia, it is expected that there will be a good improvement in sales volume and profits for the bottled water industry in Bahrain. But the company will not be able to meet the ever-increasing needs of the market with its current machinery and the capacity and therefore the management is considering the expansion in production with construction of a new line of filling in the second half of 2012 and we hope to achieve better results. Metro Markets Company S.P.C (Metro Markets)Metro Markets with its ten branches spread in the provinces of the Kingdom of Bahrain is considered the retail channel for the group’s products and the products of other companies in the field of food and consumer goods. The company achieved an increase in sales of 9% from BD 4.1 million to BD 4.4 million this year and losses declined significantly from BD 76K to BD 15K this year and we anticipate that the company will achieve profits in the year 2012.

In the name of Allah, Most Gracious, Most Merciful

Report of The Board of Directors




Trafco Logistics Company S.P.C (TLC)This company was setup with an investment of around BD 5 million in Galali area, Muharraq. Despite the short period since established with the high cost of operation and administration expenses including finance charges, the company comfortably performed and offered logistics and storage services to the parent company, subsidiaries and other business establishments. The total volume of occupancy was maximized with the achievement of 90% of the storage capacity and the company was able to gain the confidence of its clients in the field of storing chilled, frozen and dry food. The company achieved improvement in performance in the first full year of operations which saw decline of losses from BD163K in 2010 to BD 54K this year.

Qatari Bahraini Food Trading Co. L.L.C – Doha (QBC)This associate company which was established in the State of Qatar with 50% shareholding is still suffering from management problems and serious financial losses. This company that was expected to support our expansion in the GCC has not yet been able to achieve any success. This is mainly due to the failures of the successive management changes and the intense competition in the market and an extremely slim margin of profit. The future of the company is now under discussion with our partners in Qatar.

Bahrain Livestock Company B.S.C (c) (BLSC)The company made good profits this year and our 33% share of net profits was BD 693K due to increased prices of skin and waste from the cattle. The focus of this company in importing chilled meat from multiple sources has achieved positive results and contributed to the availability of this product, backed by the government without any shortage or interruption throughout the year.

Corporate Governance ProcessAs its commitment to the requirements of corporate governance code, the Board of Directors has entrusted consultants M/s. BDO and M/s. GRANT THORNTON to oversee the progress of the process and provide suggestions to improve performance in compliance with all requirements of corporate governance regulations for fully implementing them during the new year.

The company deals with institutions and companies with a relationship with some members of the Board of Directors according to the figures shown in the financial report and the Board of Directors confirms that all of these transactions are at normal market prices and conditions typical for the business.

Distribution of Profits by the BoardThe group achieved a net profit of BD 1,635,827 for the fiscal year ended 31st December 2011. With opening retained earnings carried forward from last year of BD 833,663 and a transfer by a subsidiary to its statutory reserve of BD 11,162 the total distributable profit for this year would be BD 2,458,328. The Board of Directors recommend the distribution of this profit, as follows:

• Statutory reserve BD 165,234

• General reserve BD 50,000

• Dividends at 18% amounting to BD 1,406,861

Retained earnings carried to 2012 BD 836,233

• Allocation to donations and charity BD 30,000

• Directors’ remuneration BD 102,000

• Amount to be adjusted in 2012 Profit BD 132,000

Subject to AGM approval



Information relating to members of the BoardAll information and data on the members of the Board and their participation in the meetings of the Board or committee meetings have been presented in detail in the financial report.

Finally we would like to report that due to health reasons, Mr. V.Sundar Rajan, Group General Manager resigned as of 31 December 2011 and Mr. S. Sridhar was appointed as Acting General Manager. The Board appreciates the efforts of Mr. V. Sundar Rajan as Group General Manager and wishes him good health and happiness and also wishes the new administration all the unconventional success.

Acknowledgements On behalf of all shareholders, the Board of Directors are grateful to His Royal Majesty King Hamad Bin Isa Al Khalifa, the King of the Kingdom of Bahrain, His Royal Highness Prince Khalifa Bin Salman Al Khalifa the Prime Minister, and His Royal Highness Prince Salman Bin Hamad Al Khalifa the Crown Prince and Deputy Supreme Commander. We would also like to thank all the Ministers and officials from the Ministries and institutions of the Kingdom of Bahrain for their cooperation and the continued support and assistance to the company and its subsidiaries and associates.

We would also like to show our gratitude towards the administration and the employees for their untiring efforts and dedication to work without whom the company could not have achieved this growth and good results.

We also like to sincerely thank our valued customers and our clients for their support who had a positive role in selling our products which resulted in gaining the customers’ confidence and trust in our products.

“And say: Work; so Allah will see your work and (so will) His Apostle and the believers”. Al Tawba, The Holy Qur’an.

Ebrahim Mohamed Ali Zainal Chairman

Bahrain, February 25, 2012




Independent Auditors’ Report To The Shareholders OfGeneral Trading And Food Processing Company B.S.C.

Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of General Trading and Food Processing Company B.S.C. (‘the Company’) and its subsidiaries (‘the Group’), which comprise the consolidated statement of financial position as at 31 December 2011, and the consolidated statements of income, comprehensive income, cash flows and changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory information. Board of Directors’ responsibility for the consolidated financial statements The Board of Directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of 31 December 2011, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Report on other regulatory requirements As required by the Bahrain Commercial Companies Law, we report that:

a) the Company has maintained proper accounting records and the financial statements are in agreement therewith; and

b) the financial information contained in the report of Board of Directors is consistent with the financial statements. We are not aware of any violations of the Bahrain Commercial Companies Law, the Central Bank of Bahrain (CBB) Rule Book (applicable provisions of Volume 6) and CBB directives, regulations and associated resolutions, rules and procedures of the Bahrain Bourse or the terms of the Company’s memorandum and articles of association during the year ended 31 December 2011 that might have had a material adverse effect on the business of the Company or on its consolidated financial position. Satisfactory explanations and information have been provided to us by the management in response to all of our requests.

25 February 2012 Manama, Kingdom of Bahrain

Auditors’ Report



2011 2010 Notes BD BD

Sales 39,692,991 37,300,742 Cost of sales (32,583,180) (29,824,795)

GROSS PROFIT 7,109,811 7,475,947 Storage income 241,528 51,586 Other operating income 5 219,666 229,830 Selling and distribution expenses (1,581,987) (1,657,469)General and administrative expenses (1,148,681) (1,130,899)Personnel costs 7 (3,208,798) (3,322,127)Depreciation and amortisation (442,809) (433,366)Direct operating costs - warehouse (323,037) (170,383) PROFIT FROM OPERATIONS 865,693 1,043,119 Investment income (net) 6 726,280 1,063,042 Finance costs 7 (477,441) (491,032)Share of results of associates 11 504,245 121,322 Exchange gains 71,810 26,000 PROFIT OF THE GROUP FOR THE YEAR BEFORE IMPAIRMENT OF 1,690,587 1,762,451 AVAILABLE-FOR-SALE INVESTMENTS Impairment of available-for-sale investments 12 (139,880) (31,630) PROFIT OF THE GROUP FOR THE YEAR 7 1,550,707 1,730,821 of which loss (profit) attributable to non-controlling interests 85,120 (286,582) PROFIT FOR THE YEAR ATTRIBUTABLE TO TRAFCO EQUITY SHAREHOLDERS 1,635,827 1,444,239

BASIC AND DILUTED EARNINGS PER SHARE (fils) 8 21 18

For the year ended 31 December 2011

Consolidated Statement of Income

The attached notes 1 to 33 form part of these consolidated financial statements.



2011 2010 Notes BD BD PROFIT OF THE GROUP FOR THE YEAR 1,550,707 1,730,821 Other comprehensive income (loss) Cumulative changes in fair value Realised gain included in the consolidated statement of income upon disposal of available-for-sale investments (net) (84,365) (483,808) Changes in fair value of available-for-sale investments 12 321,821 732,717 Changes in fair value of associates’ available-for-sale investments 11 (39,406) 17,115 Foreign currency translation adjustment (15,566) 15,268 Other comprehensive income for the year 182,484 281,292

TOTAL COMPREHENSIVE INCOME OF THE GROUP FOR THE YEAR 1,733,191 2,012,113 of which loss (profit) attributable to non-controlling interests 92,747 (294,063) TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO TRAFCO EQUITY SHAREHOLDERS 1,825,938 1,718,050

For the year ended 31 December 2011

Consolidated Statement of Comprehensive Income




2011 2010 Notes BD BDASSETS Non-current assets Property, plant and equipment 9 9,883,034 10,521,872 Intangible assets 10 293 16,799 Investments in associates 11 1,985,642 1,648,579 Available-for-sale investments 12 8,984,476 9,120,717 20,853,445 21,307,967

Current assets Inventories 13 10,310,526 8,024,150 Trade and other receivables 14 8,507,388 8,553,764 Bank balances and cash 15 666,351 576,049 19,484,265 17,153,963

TOTAL ASSETS 40,337,710 38,461,930 EQUITY AND LIABILITIES Equity Share capital 16 8,067,505 8,067,505 Treasury shares 17 (560,224) (560,224)Share premium 18 3,386,502 3,386,502 Statutory reserve 19 2,624,772 2,459,538 General reserve 20 1,050,000 1,000,000 Cumulative changes in fair value 4,025,444 3,835,333 Retained earnings - distributable 836,233 833,663 Retained earnings - not distributable 21 102,690 91,528 Proposed appropriations 1,456,861 1,300,543 Equity attributable to equity holders of the parent 20,989,783 20,414,388 Non-controlling interests 1,304,557 1,397,304 Total equity 22,294,340 21,811,692

Non-current liabilities Term loans 23 1,541,997 946,583 Loan from non-controlling interests 24 627,000 627,000 Employees’ end of service benefits 25 950,242 965,361 3,119,239 2,538,944

Current liabilities Trade and other payables 26 5,564,275 5,672,986 Bank overdrafts 15 3,643,053 3,433,980 Term loans 23 1,389,266 1,173,185 Import loans 27 4,327,537 3,831,143 14,924,131 14,111,294

Total liabilities 18,043,370 16,650,238

TOTAL EQUITY AND LIABILITIES 40,337,710 38,461,930

Ebrahim Mohamed Ali Zainal Yousuf Saleh Al Saleh Chairman Vice Chairman

Consolidated Statement of Financial PositionAt 31 December 2011




2011 2010 Notes BD BDOPERATING ACTIVITIES Profit of the Group for the year 1,550,707 1,730,821 Adjustments for: Allowance for impairment of inventories 63,092 130,826 Depreciation 9 1,119,561 954,013 Amortisation and write off of intangible assets 10 7,934 7,238 Share of results of associates 11 (504,245) (121,322) Impairment of available-for-sale investments 12 139,880 31,630 Allowance for impairment of trade receivables 14 120,673 40,407 Provision for employees’ end of service benefits 25 164,228 167,621 Investment income (net) (726,280) (1,063,042) Finance costs 477,441 491,032 Gain on disposal of property, plant and equipment 5 (5,521) (8,368) Foreign currency translation adjustment (net) (15,566) 15,268 2,391,904 2,376,124 Working capital changes: Inventories (2,349,468) (472,389) Trade and other receivables (74,297) 878,911 Trade and other payables (49,080) (105,815) Cash (used in) generated from operations (80,941) 2,676,831 Finance costs paid (484,033) (502,024)Directors’ remuneration paid (90,000) (90,000)Employees’ end of service benefits paid 25 (179,347) (106,512) Net cash (used in) from operating activities (834,321) 1,978,295 INVESTING ACTIVITIES Purchase of property, plant and equipment (562,220) (1,244,830)Proceeds from disposal of property, plant and equipment 87,018 24,587 Intangible assets acquired 10 (975) (612)Proceeds from disposal of intangible assets 10 9,547 - Purchase of available-for-sale investments 12 - (42,257)Proceeds from disposal of available-for-sale investments 315,647 985,493 Dividends received from associates 11 127,776 - Dividends received 644,450 580,391 Net cash from investing activities 621,243 302,772 FINANCING ACTIVITIES Dividends paid (1,213,582) (1,226,309)Term loans availed 2,105,706 1,000,000 Repayment of term loans (1,294,211) (1,732,395)Movement in import loans (net) 496,394 725,173 Net cash from (used in) financing activities 94,307 (1,233,531)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (118,771) 1,047,536 Cash and cash equivalents at 1 January (2,857,931) (3,905,467) CASH AND CASH EQUIVALENTS AT 31 DECEMBER 15 (2,976,702) (2,857,931)

Non-cash items: (i) Liabilities towards acquisition of property, plant and equipment to the extent of BD nil (2010: BD 244,866) were not settled as of

the date of the consolidated statement of financial position.

(ii) Unclaimed dividends pertaining to prior years amounting to BD 320,539 (2010: BD 283,578) have been excluded from the movement of trade and other payables above.

Consolidated Statement of Cash FlowFor the year ended 31 December 2011




Attributable to equity holders of the parent

Share Treasury Share Statutory General

capital shares premium reserve reserve

Notes BD BD BD BD BD

Balance at 1 January 2011 8,067,505 (560,224) 3,386,502 2,459,538 1,000,000

Profit for the year - 2011 - - - - -

Other comprehensive income - - - - -

Total comprehensive income

for the year - - - - -

2010 Appropriations

General reserve - 2010 20 - - - - 50,000

Dividends paid 22 - - - - -

2011 - Proposed appropriations

General reserve - 2011 20 - - - - -

Proposed dividend - cash 22 - - - - -

Transfer to statutory reserve 19 - - - 165,234 -

Transfer by subsidiary - - - - -

Balance at 31 December 2011 8,067,505 (560,224) 3,386,502 2,624,772 1,050,000

Consolidated Statement of Changes in EquityFor the year ended 31 December 2011





Retained

Cumulative Retained earnings - Total

changes in earnings - not Proposed Total shareholders’ Non-controlling Total

fair value distributable distributable appropriations reserves equity interests equity

BD BD BD BD BD BD BD BD

3,835,333 833,663 91,528 1,300,543 12,907,107 20,414,388 1,397,304 21,811,692

- 1,635,827 - - 1,635,827 1,635,827 (85,120) 1,550,707

190,111 - - - 190,111 190,111 (7,627) 182,484

190,111 1,635,827 - - 1,825,938 1,825,938 (92,747) 1,733,191

- - - (50,000) - - - -

- - - (1,250,543) (1,250,543) (1,250,543) - (1,250,543)

- (50,000) - 50,000 - - - -

- (1,406,861) - 1,406,861 - - - -

- (165,234) - - - - - -

- (11,162) 11,162 - - - - -

4,025,444 836,233 102,690 1,456,861 13,482,502 20,989,783 1,304,557 22,294,340








Share Treasury Share Statutory General

capital shares premium reserve reserve

Notes BD BD BD BD BD

Balance at 1 January 2010 8,067,505 (560,224) 3,386,502 2,313,487 950,000

Profit for the year - 2010 - - - - -

Other comprehensive income - - - - -

Total comprehensive income

for the year - - - - -

2009 Appropriations

General reserve - 2009 20 - - - - 50,000

Dividends paid 22 - - - - -

2010 - Proposed appropriations

General reserve - 2010 20 - - - - -

Proposed dividend - cash 22 - - - - -

Transfer to statutory reserve 19 - - - 146,051 -

Transfer by subsidiary - - - - -

Balance at 31 December 2010 8,067,505 (560,224) 3,386,502 2,459,538 1,000,000




Retained

Cumulative Retained earnings - Total

changes in earnings - not Proposed Total shareholders’ Non-controlling Total

fair value distributable distributable appropriations reserves equity interests equity

BD BD BD BD BD BD BD BD

3,561,522 874,843 52,703 1,300,543 12,439,600 19,946,881 1,103,241 21,050,122

- 1,444,239 - - 1,444,239 1,444,239 286,582 1,730,821

273,811 - - - 273,811 273,811 7,481 281,292

273,811 1,444,239 - - 1,718,050 1,718,050 294,063 2,012,113

- - - (50,000) - - - -

- - - (1,250,543) (1,250,543) (1,250,543) - (1,250,543)

- (50,000) - 50,000 - - - -

- (1,250,543) - 1,250,543 - - - -

- (146,051) - - - - - -

- (38,825) 38,825 - - - - -

3,835,333 833,663 91,528 1,300,543 12,907,107 20,414,388 1,397,304 21,811,692





1 CORPORATE INFORMATION General Trading and Food Processing Company B.S.C. (‘the Company’ or ‘Trafco’ or ‘the parent company’) is a public joint stock company, whose shares are publicly traded and was incorporated in the Kingdom of Bahrain by Amiri Decree No. 10 of November 1977. The Company is also registered in the Kingdom of Bahrain in accordance with the provisions of the Bahrain Commercial Companies Law and operates under commercial registration (CR) number 8500. The Company has its registered office at PO Box 20202, Kingdom of Bahrain. The Company’s main activity is trading in various kinds of food products. The consolidated financial statements were authorised for issue in accordance with a resolution of the Board of Directors on 25 February 2012.

The Group comprises of the Company and its following subsidiaries and associates:

Ownership interest Country ofRelationship / name incorporation 2011 2010 Year-end Principal activity Subsidiaries Bahrain Water Bottling Kingdom of Bahrain 100% 100% 31 December Producing, bottling and & Beverages Company marketing of sweet S.P.C. (BWBB) drinking water and beverages. Bahrain Fresh Fruits Kingdom of Bahrain 100% 100% 31 December Trading in fresh fruits Company S.P.C. and vegetables. (BFFC) Metro Markets Kingdom of Bahrain 100% 100% 31 December Trading in food items Company S.P.C. and beverages. Trafco Logistics Kingdom of Bahrain 100% 100% 31 December Providing storage and Company S.P.C. logistics services. Awal Dairy Company Kingdom of Bahrain 51% 51% 30 September Production and supply W.L.L. of milk, juices, ice cream and tomato paste. Kuwait Bahrain Dairy State of Kuwait 50%* 50%* 30 September Marketing and supply Company W.L.L. of milk, juices and associated products. Associates Bahrain Livestock Kingdom of Bahrain 33% 33% 31 December Trading in livestock. Company B.S.C. (c) (BLSC) Qatari Bahraini Food State of Qatar 50% 50% 31 December Trading in foodstuff. Trading Co. L.L.C. (QBC) Saudi International Kingdom of Saudi Arabia 26%* 26%* 30 September Dormant. Dairy Company

* Effective ownership. Owned by Awal Dairy Company W.L.L. The Group primarily operates in the Kingdom of Bahrain and partially in the State of Kuwait and State of Qatar.

Notes to the Consolidated Financial StatementsAt 31 December 2011



Notes to the Consolidated Financial Statements

2 SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The consolidated financial statements are prepared under the historical cost basis, except for investments that have been measured at fair value. The consolidated financial statements have been presented in Bahraini Dinars (BD) which is the functional currency of the Company and the presentation currency of the Group. Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), and in conformity with the Bahrain Commercial Companies Law. Basis of consolidation The consolidated financial statements comprise the financial statements of General Trading and Food Processing Company B.S.C. and its subsidiaries as at 31 December 2011. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, income and expenses, unrealised gains and losses and dividends resulting from intra-group transactions are eliminated in full. Losses within the subsidiary are attributed to the non-controlling interest even if that results in a deficit balance. A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

- Derecognises the assets (including goodwill) and liabilities of the subsidiary.

- Derecognises the carrying amount of any non-controlling interest.

- Derecognises the cumulative translation differences, recorded in other comprehensive income.

- Recognises the fair value of the consideration received.

- Recognises the fair value of any investment retained.

- Recognises any surplus or deficit in profit or loss.

- Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.

Changes in accounting policies and disclosures The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations effective as of 1 January 2011: IAS 24 Related Party Disclosures (amendment) The IASB has issued an amendment to IAS 24 that clarifies the identification of related party relationships, particularly in relation to significant influence or joint control. The new definitions emphasise a symmetrical view on related party relationship as well as clarifying in which circumstances persons and key management personnel affect related party relationship of an entity. Secondly, the amendment introduces an exemption from the general related party disclosure requirements for transactions with a government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the consolidated financial position or consolidated financial performance of the Group.

At 31 December 2011



2 SIGNIFICANT ACCOUNTING POLICIES (continued)

Changes in accounting policies and disclosures (continued) IAS 32 Financial Instruments: Presentation (amendment) The amendment alters the definition of a financial liability in IAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given prorata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. The amendment has had no effect on the consolidated financial position or consolidated financial performance of the Group as the Group has not issued these type of instruments. IFRS 7 Financial Instruments: Disclosures (amendment) These amendments introduced new disclosure requirements for transfers of financial assets, including disclosures for:

- financial assets that are not derecognised in their entirety; and

- financial assets that are derecognised in their entirety but for which the entity retains continuing involvement. The amendment has had no effect on the disclosures made by the Group as the Group has not issued these types of instruments. Improvements to IFRSs In May 2010, the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies, but did not have any impact on the consolidated financial position or consolidated financial performance of the Group. - IFRS 3 Business Combinations: The measurement options available for non-controlling interest (NCI) have been amended.

Only components of NCI that constitute a present ownership interest that entitles their holder to a proportionate share of the entity’s net assets in the event of liquidation must be measured at either fair value or at the present ownership instruments’ proportionate share of the acquiree’s identifiable net assets. All other components are to be measured at their acquisition date fair value.

- IFRS 7 Financial Instruments – Disclosures: The amendment was intended to simplify the disclosures provided, by reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context.

- Other amendments add an explicit statement that qualitative disclosure should be made in the context of the quantitative disclosures to better enable users to evaluate an entity’s exposure to risks arising from financial instruments. - IAS 1 Presentation of Financial Statements: The amendment clarifies that an analysis of each component of other comprehensive

income may be presented either in the consolidated statement of changes in equity or in the notes to the consolidated financial statements;

Other amendments resulting from Improvements to IFRSs to the following standards did not have any impact on the accounting policies, financial position or performance of the Group: - IFRS 3 Business Combinations [Contingent consideration arising from business combination prior to adoption of IFRS 3

(as revised in 2008];

- IFRS 3 Business Combinations (Un-replaced and voluntarily replaced share-based payment award);




2 SIGNIFICANT ACCOUNTING POLICIES (continued) Changes in accounting policies and disclosures (continued)

- IAS 27 Consolidated and Separate Financial Statements;

- IAS 34 Interim Financial Statements; and

- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments.

Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as a principal or an agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific recognition criteria must also be met before revenue is recognised: Sale of goods Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer usually on delivery of the goods and the amount of revenue can be measured reliably. Promotional offers are included as revenue with a corresponding charge to selling and distribution costs. Interest income Interest income is recorded using the effective interest rate, which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Other revenue Dividend revenue is recognised when the Group’s right to receive the payment is established. Other revenue is recognised on an accrual basis when earned. Property, plant and equipment Property, plant and equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the consolidated statement of income as incurred. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings on leasehold land over 10 to 30 years

Plant, machinery and cold store equipment over 2 to 10 years

Furniture, fixtures and office equipment over 2 to 5 years

Motor vehicles over 4 to 12 years

Freehold land and capital work-in-progress are not depreciated. Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately is capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases the future economic benefits of the related item of property, plant and equipment. All other expenditure is recognised in the consolidated statement of income as the expense is incurred.





Property, plant and equipment (continued)The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use. The Group assesses its impairment calculation after reviewing detailed budgets and forecast calculations which are prepared separately for each of the Group’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of one year. For longer periods, a long term growth rate is calculated and applied to projected future cash flows after the first year. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of income in the year the asset is derecognised. The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively if appropriate. Intangible assets Identifiable non-monetary assets from which future benefits are expected to flow are treated as intangible assets. These are primarily costs relating to franchise, application, territory fees and trademarks. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any impairment losses. Costs relating to franchise, application and territory fees are capitalised and amortised on a straight-line basis over their estimated useful lives of twenty years, being the term of the franchise agreement. Costs relating to trademarks are amortised over a period of five years after registration. Costs relating to other intangible assets are amortised over a period of five years. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the consolidated statement of income when the asset is derecognised.

Investments in associates The Group’s investments in associates are accounted for using the equity method of accounting. Associates are entities over which the Group has significant influence and which are neither subsidiaries nor joint ventures. Under the equity method, the investments in associates are carried in the consolidated statement of financial position at cost plus the post acquisition changes in the Group’s share of the net assets of the associates. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. The consolidated statement of income reflects the share of the results of operations of the associates. Where there has been a change recognised directly in the statements of comprehensive income of the associates, the Group recognises its share of any changes and discloses this, when applicable, in the consolidated statement of comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associates are eliminated to the extent of the interest in the associates.





Investments in associates (continued) The share of profit or loss of associates is shown on the face of the consolidated statement of income. This is the profit attributable to equity holders of the associate and therefore is profit after non-controlling interests in the subsidiaries of the associates. The financial statements of the associates are prepared for the same reporting period as the parent company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investments in its associates. The Group determines at each consolidated statement of financial position date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the consolidated statement of income. Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in the consolidated statement of income. Financial assets Initial recognition and measurement Financial assets within the scope of IAS 39 are classified as trade and other receivables or available-for-sale financial assets, as appropriate. The Group determines the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. The Group’s financial assets include available-for-sale investments, loans and receivables and bank balances and cash. Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: Available-for-sale investments Available-for-sale financial investments include investments in equity securities. Equity investments classified as available-for sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income until the investment is derecognised or determined to be impaired, at which time the cumulative gain or loss is recognised in the consolidated statement of income.





Subsequent measurement (continued)

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less any impairment in value. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Gains and losses are recognised in the consolidated statement of income when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Bad debts are written off in the consolidated statement of income when identified. Trade and other receivables and bank balances are classified as loan and receivables. Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash on hand and bank balances, net of outstanding bank overdrafts. Impairment of financial assets The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Loans and receivables For loans and receivables carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. Available-for-sale investments For available-for-sale investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. In case of equity instruments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. ‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the consolidated statement of income is removed from other comprehensive income and recognised in the consolidated statement of income. Impairment losses on investments in equity instruments are not reversed through the consolidated statement of income; increases in their fair value after impairment are recognised directly in other comprehensive income.




2 SIGNIFICANT ACCOUNTING POLICIES (continued) Financial liabilities Initial recognition and measurement Financial liabilities within the scope of IAS 39 are classified as loans and borrowings or financial liabilities at fair value through profit or loss, as appropriate. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, directly attributable transaction costs. The Group’s financial liabilities include term loans, loan from non controlling interest, trade and other payables, import loans and bank overdrafts. Subsequent measurement The measurement of financial liabilities depends on their classification, as follows: Loans and borrowings After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the consolidated statement of income when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process. All borrowing costs are expensed in the period they occur. Trade and other payables Liabilities for trade and other payables are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Fair value of financial instruments The fair values of financial instruments that are traded in active markets at each reporting date are determined by reference to quoted market or dealer bid price quotations, without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models. Amortised cost of financial instruments Amortised cost is computed using the EIR method less any allowance for impairment and principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the EIR.




2 SIGNIFICANT ACCOUNTING POLICIES (continued) Derecognition of financial instruments Financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

- the rights to receive cash flows from the asset have expired; or - the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash

flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Inventories Inventories are stated at the lower of cost and net realisable value after making due allowance for any obsolete or slow moving items. Costs are those expenses incurred in bringing each product to its present location and condition, as follows: Raw materials, consumables, landed cost on a weighted average basis. spare parts and other items Finished goods Cost of direct materials and labour and proportion of manufacturing overheads based on normal operating capacity. Goods held for resale landed cost on a first-in, first-out basis. Net realisable value is based on estimated selling price in the ordinary course of business less any further costs expected to be incurred on completion and disposal. Treasury shares Own equity instruments which are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in the consolidated statement of income on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Voting rights related to treasury shares are nullified for the Company and no dividends are allocated to them respectively. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated statement of income, net of any reimbursement. Employees’ end of service benefits The Group makes contributions to the Social Insurance Organisation (SIO) for its Bahraini employees and Public Authority for Social Security for its Kuwaiti employees, calculated as a percentage of the employees’ salaries. The Group’s obligations are limited to these contributions, which are expensed when due.




2 SIGNIFICANT ACCOUNTING POLICIES (continued) Employees’ end of service benefits (continued) The Group also provides for end of service benefits for its expatriate employees. The entitlement to these benefits is based upon the employee’s final salary and length of service, subject to the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment. Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. Group as lessee Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the consolidated statement of income on a straight-line basis over the lease term. Foreign currency transactions The Group’s consolidated financial statements are presented in Bahraini Dinars (BD). Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions and balances Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the consolidated statement of financial position date and all differences are taken to the consolidated statement of income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Translation gains or losses on non-monetary available-for-sale investments carried at fair value are included in equity as part of the fair value adjustment on available-for-sale investments. Group companies The assets and liabilities of foreign operations are translated into Bahraini Dinars at the rate of exchange prevailing at the consolidated statement of financial position date and their statements of income are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the deferred cumulative amount recognised in the consolidated statement of comprehensive income relating to that particular foreign operation is recognised in the consolidated statement of income. 3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.




3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) The key assumptions concerning the future and other key sources of estimation uncertainties at the consolidated statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year, are discussed below: Estimates and assumptions Impairment of property, plant and equipment

The Group assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessment of the time value of money and the risks specific to the assets. The Directors do not believe that there is any impairment of property, plant and equipment as at 31 December 2011 and 31 December 2010. Useful lives of property, plant and equipment The Group’s management determines the estimated useful lives of its property, plant and equipment for calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and future depreciation charges would be adjusted where management believes the useful lives differ from previous estimates. Impairment of available-for-sale investments For available-for-sale investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. The determination of what is ‘significant’ or ‘prolonged’ requires judgment. In making this judgment, the Group evaluates, among other factors, historical share price movements and the duration or extent to which the fair value of an investment is less than its cost. At 31 December 2011, the provision for impairment of available-for-sale investments amounted to BD 494,498 (2010: BD 393,701). In determining any impairment for the unquoted investments carried at cost, assumptions have been made regarding the expected future cash generation of the assets, discount rates to be applied and the expected period of benefits.




3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) Valuation of unquoted available-for-sale investments Management uses its best judgment in determining fair values of the unquoted private equity investments by reference to recent, material arms’ length transactions involving third parties. The management is also required to make judgment as to the comparability of other companies to an unquoted equity investment when determining the Price Earnings ratio (PE ratio) used to value that investment. Management uses its best judgment, however, the actual amount realised in a future transaction may differ from the current estimate of fair value given the inherent uncertainty surrounding the valuation of unquoted private equity investments. Impairment of inventories Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete, an estimate is made of their net realisable value. For individually significant amounts this estimation is performed on an individual basis. Amounts which are not individually significant, but which are old or obsolete, are assessed collectively and a provision applied according to the inventory type and the degree of ageing or obsolescence, based on historical selling prices. At the consolidated statement of financial position date, gross raw materials and consumables, spare parts and other items, finished goods and goods held for resale amounted to BD 9,788,169 (2010: BD 7,362,392), with an allowance for impairment of inventories of BD 457,482 (2010: BD 430,743). Any difference between the amounts actually realised in future periods and the amounts expected will be recognised in the consolidated statement of income.

Impairment of trade receivables An estimate of the collectible amount of trade receivables is made when collection of the full amount is no longer probable. For individually significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are past due, are assessed collectively and a provision applied according to the length of time past due, based on historical recovery rates. At the consolidated statement of financial position date, gross trade receivables were BD 8,007,032 (2010: BD 8,269,334), with an allowance for impairment of trade receivables of BD 494,176 (2010: BD 459,763). Any difference between the amounts actually collected in future periods and the amounts expected will be recognised in the consolidated statement of income. 4 IASB STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE Standards issued but not yet effective up to the date of issuance of the Group’s consolidated financial statements are listed below. This listing is of standards and interpretations issued, which the Group reasonably expects to be applicable at a future date. The Group intends to adopt those standards (where applicable) when they become effective: IAS 1 Financial Statements Presentation The amendments becomes effective for annual periods beginning on or after 1 July 2012 and require that an entity present separately, the items of other comprehensive income that would be reclassified (or recycled) to profit or loss in the future if certain conditions are met (for example, upon derecognition or settlement), from those that would never be reclassified to profit or loss. The amendment affects presentation only, therefore, will have no impact on the Group’s financial position or performance.




4 IASB STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE (continued) IAS 19 Employee Benefits The IASB has issued numerous amendments to IAS 19, which are effective for annual periods beginning on or after 1 January 2013. These include the elimination of the corridor approach and recognising all actuarial gains and losses in Other Comprehensive Income as they occur; immediate recognition of all past service costs; and replacement of interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset); and certain clarifications and re-wording. The Group is currently assessing the full impact of these amendments. IFRS 9 Financial Instruments IFRS 9 as issued reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the statement of income, unless this creates an accounting mismatch. It also includes those paragraphs of IAS 39 dealing with how to measure fair value and accounting for derivatives embedded in a contract that contains a host that is not a financial asset, as well as the requirements of IFRIC 9 Reassessment of Embedded Derivatives. The standard is currently effective for annual periods beginning on or after 1 January 2013. IASB issued an exposure draft (ED) Mandatory effective date of IFRS9 - that proposes the mandatory effective date to periods beginning on or after 1 January 2015 with early application continuing to be permitted. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The Group will quantify the effect of adoption of this Standard, in conjunction with the other phases, when issued, to present a comprehensive picture. IFRS 10 Consolidated Financial Instruments IFRS 10 introduces a new approach to determining which investees should be consolidated and provides a single consolidation model that identifies control as the basis for consolidation for all types of entities. An investor controls an investee when: - it is exposed or has rights to variable returns from its involvement with that investee; - it has the ability to affect those returns through its power over that investee; and - there is a link between power and returns. Control is re-assessed as facts and circumstances change. IFRS 10 replaces IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation - Special Purpose Entities. IFRS 10 is effective for annual periods beginning on or after 1 January 2013 and earlier application is permitted. The Group is currently assessing the full impact of this new standard.




4 IASB STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE (continued) IFRS 11 Joint Arrangements IFRS 11 establishes principles for the financial reporting by parties to a joint arrangement and improves on IAS 31 by establishing principles that are applicable to the accounting for all joint arrangements. IFRS 11 classifies joint arrangements into two types – joint operations and joint ventures; and defines joint control as the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (i.e. activities that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control. IFRS 11 supersedes IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities – Non-monetary Contributions by Venturers. IFRS 11 is effective for annual periods beginning on or after 1 January 2013 and earlier application is permitted. The Group is currently assessing the full impact of this new standard. IFRS 12 Disclosure of Interests in Other Entities IFRS 12 combines, enhances and replaces the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. As a consequence of these new IFRSs, the IASB also issued amended and retitled IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures. IFRS 12 aims to provide information to enable users to evaluate: - the nature of, and risks associated with, an entity’s interests in other entities; and - the effect of those interests on the entity’s financial position, financial performance and cash flows. IFRS 12 is effective for annual periods beginning on or after 1 January 2013 and earlier application is permitted. The Group is currently assessing the full impact of this new standard. IFRS 13 Fair Value Measurement IFRS 13 replaces the fair value measurement guidance contained in individual IFRSs with a single source of fair value measurement guidance. It defines fair value, establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements. It explains how to measure fair value when it is required or permitted by other IFRSs. IFRS 13 does not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs. IFRS 13 is effective for annual periods beginning on or after 1 January 2013 and earlier application is permitted. The Group is currently assessing the full impact of this new standard. IAS 27 Consolidated and Separate Financial Statements (as revised in 2011) IAS 27 (2011) supersedes IAS 27 (2008). As a consequence of the new IFRS 10 and IFRS 12 aforementioned, IAS 27 (2011) carries forward the existing accounting and disclosure requirements for separate financial statements, with some minor clarifications.

IAS 27 (2011) is effective for annual periods beginning on or after 1 January 2013 and earlier application is permitted. The Group does not present separate financial statements. IAS 28 Investments in Associates (as revised in 2011) IAS 28 (2011) supersedes IAS 28 (2008) and IAS28 (2011). As a consequence of the new IFRS 11 and IFRS 12 (refer above), IAS 28 has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates.




4 IASB STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE (continued) IAS 28 Investments in Associates (as revised in 2011) (continued) IAS 28 (2011) is effective for annual periods beginning on or after 1 January 2013 and earlier application is permitted. The Group is currently assessing the full impact of this revised standard. 5 OTHER OPERATING INCOME This represents income from rebates, gain on disposal of property, plant and equipment and other miscellaneous income of the Group. 6 INVESTMENT INCOME 2011 2010 BD BD Dividend income 644,450 580,391 Gains on disposal of available-for-sale investments 81,830 482,651 726,280 1,063,042 7 PROFIT OF THE GROUP FOR THE YEAR Profit of the Group for the year is stated after charging: 2011 2010 BD BD Inventories recognised as an expense upon sale of finished goods 32,246,141 27,699,710 Write down of inventories to net realisable value (note 13) (36,353) (1,408) Allowance for impairment of inventories 63,092 130,826 Allowance for impairment of trade receivables (note 14) 120,673 40,407 Operating lease rentals 333,437 309,877 Gain on disposal of property, plant and equipment 5,521 8,368 2011 2010 BD BDFinance costs Interest on bank overdrafts 207,199 241,962 Interest on term loans and import loans 253,302 238,150 Bank charges 16,940 10,920 477,441 491,032 2011 2010 BD BDStaff costs Salaries and wages 2,919,807 2,941,500 Contributions to Social Insurance Organisation (SIO) and Public Authority for Social Security 230,430 273,601 Employees’ end of service benefits (note 25) 164,228 167,621 Other benefits 949,290 973,175 4,263,755 4,355,897




7 PROFIT OF THE GROUP FOR THE YEAR (continued) The staff costs have been allocated in the consolidated statement of income as follows: 2011 2010 BD BD

Cost of sales 1,019,044 1,020,237 Personnel costs 3,208,798 3,322,127 Direct operating costs - warehouse 35,913 13,533 4,263,755 4,355,897

8 EARNINGS PER SHARE Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year, excluding the average number of ordinary shares purchased by the Company and held as treasury shares. The following reflects the income and share data used in the basic and diluted earnings per share computations:

2011 2010Profit for the year attributable to TRAFCO equity shareholders – BD 1,635,827 1,444,239

Weighted average number of shares, net of treasury shares 78,158,923 78,158,923 Basic and diluted earnings per share (fils) 21 18 Basic and diluted earnings per share are the same as the Company has not issued any instruments that would have a dilutive effect. There have been no other transactions involving ordinary or potential ordinary shares between the reporting date and the date of issue of these consolidated financial statements.




9 PROPERTY, PLANT AND EQUIPMENT Plant, Furniture, Buildings machinery & fixtures Capital Freehold on leasehold cold store and office Motor work-in- land land equipment equipment vehicles progress Total BD BD BD BD BD BD BDCost: At 1 January 2011 62,821 7,713,597 11,981,033 1,452,069 2,252,428 39,558 23,501,506 Additions - 8,026 55,266 50,715 31,686 416,527 562,220 Transfers - 52,715 202,230 - - (254,945) - Disposals - (43,981) (39,781) (55,190) (63,226) - (202,178) At 31 December 2011 62,821 7,730,357 12,198,748 1,447,594 2,220,888 201,140 23,861,548 Depreciation: At 1 January 2011 - 2,798,327 7,367,092 1,187,398 1,626,817 - 12,979,634 Charge for the year - 258,625 631,055 87,489 142,392 - 1,119,561 Relating to disposals - (2,388) (22,665) (49,521) (46,107) - (120,681) At 31 December 2011 - 3,054,564 7,975,482 1,225,366 1,723,102 - 13,978,514 Net book values: At 31 December 2011 62,821 4,675,793 4,223,266 222,228 497,786 201,140 9,883,034 Buildings and plant and machinery, with net book values of BD 57,528 (2010: BD 72,821) are situated on land owned by the Government of the Kingdom of Bahrain. No lease agreement exists between the Government and the Group. Buildings and plant and machinery of a subsidiary, with net book values of BD 838,437 (2010: BD 975,677), are situated on land leased from the Government of the Kingdom of Bahrain. The lease is for a period of 5 years expiring in 2014 and is renewable at the subsidiary’s option. Buildings of a subsidiary, with net book values of BD 226,957 (2010: BD 199,330), are situated on land leased from related parties. The lease is for a period of 10 years expiring in 2015 and is renewable at the subsidiary’s option. Property, plant and equipment of a subsidiary, with net book values of BD 2,005,009 (2010: BD 1,938,327), are mortgaged as a security for term loans (note 23). Further motor vehicles amounting to BD 75,878 (2010: BD 84,619) were purchased through term loans which are secured against these motor vehicles (note 23). Plant, Furniture, Buildings machinery & fixtures Capital Freehold on leasehold cold store and office Motor work-in- land land equipment equipment vehicles progress Total BD BD BD BD BD BD BDCost: At 1 January 2010 119,501 4,536,996 9,698,740 1,374,932 2,235,425 4,600,720 22,566,314 Additions - 153,519 47,499 51,625 119,094 678,384 1,050,121 Transfers (56,680) 3,023,082 2,234,794 32,556 - (5,233,752) - Disposals - - - (7,044) (102,091) (5,794) (114,929) At 31 December 2010 62,821 7,713,597 11,981,033 1,452,069 2,252,428 39,558 23,501,506 Depreciation: At 1 January 2010 - 2,589,048 6,853,966 1,107,548 1,573,769 - 12,124,331 Charge for the year - 209,279 513,126 81,099 150,509 - 954,013 Relating to disposals - - - (1,249) (97,461) - (98,710) At 31 December 2010 - 2,798,327 7,367,092 1,187,398 1,626,817 - 12,979,634 Net book values: At 31 December 2010 62,821 4,915,270 4,613,941 264,671 625,611 39,558 10,521,872




9 PROPERTY, PLANT AND EQUIPMENT (continued) The depreciation charge for the year has been allocated in the consolidated statement of income as follows:

2011 2010 BD BD

Cost of sales 457,383 397,827 Depreciation and amortisation 437,212 426,128 Direct operating costs - warehouse 224,966 130,058 1,119,561 954,013 10 INTANGIBLE ASSETS Trademarks Other Total BD BD BDCost: At 1 January 2010 53,231 33,627 86,858 Additions during the year 612 - 612 At 31 December 2010 53,843 33,627 87,470 Additions during the year 975 - 975 At 31 December 2011 54,818 33,627 88,445

Amortisation: At 1 January 2010 51,673 11,760 63,433 Amortisation 518 6,720 7,238

At 31 December 2010 52,191 18,480 70,671 Amortisation 2,334 5,600 7,934 Disposal - 9,547 9,547 At 31 December 2011 54,525 33,627 88,152 Net book values: At 31 December 2011 293 - 293 At 31 December 2010 1,652 15,147 16,799

11 INVESTMENTS IN ASSOCIATES 2011 2010 BD BD At 1 January 1,648,579 1,510,142 Share of results 504,245 121,322 Changes in fair value of available-for-sale investments (39,406) 17,115 Dividend received during the year (127,776) -

At 31 December 1,985,642 1,648,579




11 INVESTMENTS IN ASSOCIATES (continued)

The following table illustrates summarised financial information of the Group’s investments in associates: 2011 2010 BD BDShare of associates’ statements of financial position: Current assets 3,734,561 4,098,917 Non-current assets 493,423 546,646 Current liabilities (2,227,965) (2,984,044)Non-current liabilities (14,377) (12,940) Carrying amount of the investments in associates 1,985,642 1,648,579 Share of associates’ revenues and results: Revenue 10,506,102 6,306,499 Results 504,245 121,322

12 AVAILABLE-FOR-SALE INVESTMENTS 2011 2010 BD BDQuoted equity investments: - in Bahrain 4,898,050 5,201,450 - other GCC countries 699,088 800,859 5,597,138 6,002,309

Unquoted investments: - equities: at cost 30,000 30,000 at fair value 2,007,000 1,501,521 - funds: at cost 401,271 1,367,479 at fair value 949,067 219,408 3,387,338 3,118,408

Total available-for-sale investments 8,984,476 9,120,717 The following is a summary of the movements in available-for-sale investments for the year: 2011 2010 BD BD At 1 January 9,120,717 9,364,023 Purchase of investments - 42,257 Disposal of investments at book value (318,182) (986,650)Changes in fair value during the year 321,821 732,717 Impairment in value (139,880) (31,630) At 31 December 8,984,476 9,120,717




12 AVAILABLE-FOR-SALE INVESTMENTS (continued)

Movements in the provision for impairment in the value of available-for-sale investments were as follows:

2011 2010 BD BD

At 1 January 393,701 424,231 Recognised during the year 139,880 31,630 Relating to disposal of investments (39,083) (62,160)

At 31 December 494,498 393,701

Quoted investments The fair values of the quoted equity investments are determined by reference to published price quotations in an active market. Unquoted investments - funds The fair values of unquoted investments have been estimated using indicative bids provided by the fund administrators. For the real estate funds, there are no readily observable market prices available and hence, these funds are carried at cost. Unquoted investments - equity The Group holds a non-controlling interest amounting to BD 1.9 million (2010: BD 1.4 million) in an entity which provides warehouse and storage facilities. The fair value of unquoted ordinary shares has been estimated using the price earnings ratio (PE ratio) of comparable companies. The valuation requires management to make certain assumptions about the comparability of the companies used when determining the PE ratio in the valuation. Management has determined that the potential offset of using the necessarily possible alternatives as inputs to the valuation model would reduce the fair value by BD 381,644 (2010: BD 554,718) using less favourable assumptions and increase the fair value by BD 190,822 (2010: BD 277,359) using more favourable assumptions.

13 INVENTORIES

2011 2010 BD BD

Goods-in-transit 979,839 1,092,501 Raw materials and consumables [net of allowance for impairment of BD 142,746 (2010: BD 109,063)] 4,112,209 2,228,900 Spare parts and other items [net of allowance for impairment of BD 283,133 (2010: BD 264,803)] 292,322 315,049 Finished goods [net of allowance for impairment of BD 31,603 (2010: BD 56,877)] 1,293,096 716,043 Goods held for resale 3,633,060 3,671,657 10,310,526 8,024,150




13 INVENTORIES (continued)

Movements in the allowance for impairment of inventories were as follows: 2011 Raw materials Spare parts and and Finished consumables other items goods Total BD BD BD BD At 1 January 109,063 264,803 56,877 430,743 Charge for the year 33,683 20,330 9,079 63,092 Amounts written off - (2,000) (34,353) (36,353) At 31 December 142,746 283,133 31,603 457,482

2010 Raw materials Spare parts and and Finished consumables other items goods Total BD BD BD BD

At 1 January 57,522 243,803 - 301,325 Charge for the year 52,949 21,000 56,877 130,826 Amounts written off (1,408) - - (1,408) At 31 December 109,063 264,803 56,877 430,743

14 TRADE AND OTHER RECEIVABLES 2011 2010 BD BDTrade receivables [net of allowance for impairment of BD 494,176 (2010: BD 459,763) 7,250,690 7,554,677 Trade receivables - related parties (note 28) 262,166 254,894 7,512,856 7,809,571

Other receivables 383,978 497,843 Other receivables - related parties (note 28) 259,375 - Prepayments 131,920 119,757 Advances towards investments 114,631 114,631 Deposits 104,628 11,962

8,507,388 8,553,764

Terms and conditions of the above financial assets are as follows: - Trade receivables are non-interest bearing and are normally settled on 60 to 90 day terms. - Other receivables are non interest-bearing and have terms ranging between one to three months. - Advances towards investments represent an advance given towards an investment listed on the Bahrain Bourse (previously

Bahrain Stock Exchange) amounting to BD 96,631 (called amount), which will be converted to share capital in the future and an advance towards share capital of Conference and Exhibition Company amounting to BD 18,000.

- For terms and conditions of trade receivables - related parties, refer to note 28. As at 31 December 2011, trade receivables at a value of BD 494,176 (2010: BD 459,763) were impaired and fully provided for. For explanations on the Group’s credit risk management processes, refer to note 30.




14 TRADE AND OTHER RECEIVABLES (continued) Movements in the allowance for impairment of trade receivables were as follows: 2011 2010 BD BD At 1 January 459,763 425,437 Charge for the year 120,673 40,407 Amounts written off (86,260) (6,081) At 31 December 494,176 459,763

As at 31 December, the ageing analysis of unimpaired trade receivables is as follows: Neither past Past due but not impaired due nor Less than 30 to 60 More than Total impaired 30 days days 60 days BD BD BD BD BD 2011 7,512,856 3,597,535 1,580,174 1,425,174 909,973 2010 7,809,571 3,791,801 1,550,538 1,225,876 1,241,356

Unimpaired trade receivables are expected, on the basis of past experience, to be fully recoverable. It is not the practice of the Group to obtain collateral over trade receivables. 15 CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the consolidated statement of cash flows consist of the following consolidated statement of financial position amounts: 2011 2010 BD BD

Bank balances and cash on hand 666,351 576,049 Bank overdrafts (3,643,053) (3,433,980) Cash and cash equivalents as at 31 December (2,976,702) (2,857,931)

Bank overdrafts are denominated mainly in Bahraini Dinars and United States dollars and carry a weighted average effective interest rate of 4.31% (2010: 4.30%) per annum. At 31 December 2011, the Group had BD 10,565,141 (2010: BD 7,474,870) of undrawn borrowing facilities in respect of which all conditions had been met.




16 SHARE CAPITAL 2011 2010 BD BDAuthorised: 100,000,000 (2010: 100,000,000) shares of BD 0.100 each 10,000,000 10,000,000 Issued, subscribed and fully paid-up: 80,675,052 (2010: 80,675,052) shares of BD 0.100 each 8,067,505 8,067,505

a) Distribution of share capital is as follows: 2011 2010 Number Number % of total Number Number % of total of of outstanding of of outstandingCategories shares shareholders share capital shares shareholders share capital Less than 1% 45,034,796 3,147 56 45,868,037 3,179 57 1% up to less than 5% 27,206,610 13 34 26,373,369 14 33 10% up to less than 20% 8,433,646 1 10 8,433,646 1 10 80,675,052 3,161 100 80,675,052 3,194 100 b) The name and nationality of the major shareholder, holding more than 5% of the issued share capital of the Company and the number of shares held by him are as follows: Number Name Nationality of shares Abdulhameed Zainal Mohamed Zainal Bahraini 8,433,646

17 TREASURY SHARES Treasury shares represent 2,516,129 (2010: 2,516,129) shares, representing 3.12% (2010: 3.12%) of the issued share capital, held by the Company. The Bahrain Commercial Companies Law permits the holding of up to 10% of issued shares as treasury shares.

18 SHARE PREMIUM The share premium arose on the issue of shares in 2000 and rights shares issued in 2008 and is not available for distribution, but can be utilised as stipulated in the Bahrain Commercial Companies Law. 19 STATUTORY RESERVE As required by the Bahrain Commercial Companies Law and the Company’s articles of association, 10% of the profit for the year has been transferred to statutory reserve. The Company may resolve to discontinue such annual transfers when the reserve totals 50% of the issued and paid up share capital. The reserve cannot be utilised for the purpose of a distribution except in such circumstances as stipulated in the Bahrain Commercial Companies Law. 20 GENERAL RESERVE The transfer to the general reserve has been made in accordance with the articles of association of the Company. The Company may resolve to discontinue such annual transfers, when deemed appropriate. There are no restrictions on the distribution of this reserve.




21 RETAINED EARNINGS - NOT DISTRIBUTABLE

This represents the Group’s share in the statutory reserves of its subsidiaries and is not available for distribution.

22 DIVIDENDS PAID AND PROPOSED During the year, cash dividends of 16 fils per share, excluding treasury shares, totaling BD 1,250,543 relating to 2010 were declared and paid (2010: 16 fils per share, excluding treasury shares, totaling BD 1,250,543 relating to 2009). A cash dividend of 18 fils per share, excluding treasury shares, totaling BD 1,406,861 (2010: cash dividend of 16 fils per share, excluding treasury shares, totaling BD 1,250,543) has been proposed and will be submitted for formal approval at the Annual General Meeting.

23 TERM LOANS 2011 2010 BD BD

a) Loan from BNP Paribas 83,333 416,667

b) Loan from Ahli United Bank - 1 187,500 437,500

c) Loan from Ahli United Bank - 2 249,998 416,666

d) Loan from Ahli United Bank - 3 249,998 416,666

e) Loan from Ahli United Bank - 4 416,667 -

f) Loan from Ahli United Bank - 5 458,333 -

g) Loan from Tetrapak Gulf - 1 128,734 193,103

h) Loan from Bahrain Development Bank B.S.C. - 151,325

i) Term loans - Vehicles 50,994 67,921

j) Loan from Ahli United Bank - 6 - 19,920

k) Loan from National Bank of Bahrain 1,000,000 -

l) Loan from Tetra Laval (Comet C2) 105,706 - 2,931,263 2,119,768 The term loans are presented in the statement of financial position as follows: 2011 2010 BD BD Current 1,389,266 1,173,185 Non-current 1,541,997 946,583 2,931,263 2,119,768




23 TERM LOANS (continued)

a) The term loan was obtained from BNP Paribas and carries an effective interest rate of three months BIBOR plus 1.25% (2010: three months BIBOR plus 1.25%) per annum. The loan is denominated in Bahraini Dinars and is repayable in 12 equal quarterly instalments of BD 83,333 which commenced in April 2009.

b) The term loan was obtained from Ahli United Bank B.S.C. and carries an effective interest rate of three months BIBOR plus 1.5% (2010: three months BIBOR plus 1.5%) per annum. The loan is denominated in Bahraini Dinars and is repayable in 16 equal quarterly instalments of BD 62,500 which commenced in October 2008.

c) The term loan was obtained from Ahli United Bank B.S.C. and carries an effective interest rate of BIBOR plus 2.25% (2010: 2.25%) per annum. The loan is denominated in Bahraini Dinars and is repayable in 12 equal quarterly instalments of BD 41,667 which commenced in July 2010.

d) The term loan was obtained from Ahli United Bank B.S.C. and carries an effective interest rate of BIBOR plus 2.25% (2010: 2.25%) per annum. The loan is denominated in Bahraini Dinars and is repayable in 12 equal quarterly instalments of BD 41,667 which commenced in July 2010.

e) The term loan of BD 500,000 has been obtained from Ahli United Bank B.S.C. during the year (June 2011) for working capital and supporting subsidiaries and carries an effective interest rate of three months BIBOR plus 2.25% per annum and is repayable in 12 equal quarterly installments of BD 41,667 commencing from 29 September 2011.

f) The term loan of BD 500,000 has been obtained from Ahli United Bank B.S.C. during the year (August 2011) for working capital and supporting subsidiaries and carries an effective interest rate of three months BIBOR plus 2.25% per annum and is repayable in 12 equal quarterly installments of BD 41,667 commencing from 15 December 2011.

g) This loan was provided under an asset finance scheme from Tetrapak Gulf towards the purchase of Tetrapak equipment with a net book value of BD 255,533 (2010: BD 277,443). The loan is denominated in United States Dollars and is repayable in 5 equal annual instalments of US$ 170,690 which commenced in May 2009. The loan does not carry any interest.

h) The term loan was obtained from Bahrain Development Bank B.S.C. and carries interest at a fixed rate of 6% (2010: 6%) per annum. The loan was fully repaid during the year.

i) These loans were obtained for purchase of motor vehicles and are secured against the motor vehicles. These loans carry an effective interest rate of 5.81% per annum (2010: 5.81%). These loans are denominated in Bahraini Dinars and are repayable in varying instalments ending in October 2014 (refer note 9).

j) The term loan was obtained from Ahli United Bank B.S.C and carries an effective interest rate of BIBOR plus 1.5% (2010: BIBOR plus 1.5%) per annum. The loan was fully repaid during the year.

k) The term loan of BD 1 million has been obtained from NBB (National Bank of Bahrain) during the year (October and December 2011, BD 500,000 each) for working capital and carries an effective interest rate of three months BIBOR plus 2.5% per annum and is repayable in 11 equal quarterly installments of BD 83,500 commencing from January 2012 and final installment is BD 81,500.

l) This loan was provided under an asset finance scheme from Tetra Laval Credit AB towards the purchase of an ice cream filling machine with a net book value of BD 165,153 (2010: nil). The loan was denominated in Euros and carried an effective interest rate of EURIBOR plus 2.2% per annum is repayable in 16 equal quarterly installments of BD 7,015 commencing from December 2011.

Loans instalments payable within twelve months from the consolidated statement of financial position date are disclosed as current portion; the remaining are disclosed as non-current.




24 LOAN FROM NON-CONTROLLING INTERESTS The loan is unsecured and has no set repayment terms. The loan carries an effective interest rate of 5% (2010: 5%) per annum.

25 EMPLOYEES’ END OF SERVICE BENEFITS Movements in the provision recognised in the consolidated statement of financial position are as follows: 2011 2010 BD BD

At 1 January 965,361 904,252 Provided during the year 164,228 167,621 Paid during the year (179,347) (106,512) At 31 December 950,242 965,361 26 TRADE AND OTHER PAYABLES 2011 2010 BD BD

Trade payables 3,674,876 3,607,451 Amounts due to related parties (note 28) 405,579 381,691 Accrued expenses 706,973 795,450 Unclaimed dividends 320,539 283,578 Retention payable - 244,866 Other payables 456,308 359,950

5,564,275 5,672,986

Terms and conditions of the above financial liabilities: - Trade payables are non-interest bearing and are normally settled on 60 to 90 day terms. - For terms and conditions relating to amounts due to related parties, refer to note 28. - Retention payable is non-interest bearing and will be settled in one year. - Other payables are non-interest bearing and have average terms ranging between one to three months. For explanations on the Group’s credit risk management processes, refer to note 30.

27 IMPORT LOANS

These represent loans obtained from commercial banks for the import of raw materials and finished goods with a weighted average effective interest rate of 4% (2010: 3.7%) per annum and secured by promissory notes issued by the Group. 28 RELATED PARTY TRANSACTIONS Related parties represent associated companies, major shareholders, directors, companies having common directors and key management personnel of the Group, and entities controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Group’s management.




28 RELATED PARTY TRANSACTIONS (continued)

Transactions and balances with related parties included in the consolidated statement of financial position and consolidated statement of income are as follows:

Name Relationship Nature of transactions Bahrain Livestock Company B.S.C. (c) Associated company Services rendered and dividend received. Qatari Bahraini Food Trading Co. L.L.C. Associated company Services rendered. Yousuf Abdul Rehman Engineer Holding W.L.L. Common director Services received. Intershield W.L.L. Common director Insurance services. United Paper Industries B.S.C. Common director Purchases of packaging materials. Bahrain Flour Mills Company B.S.C. Common director Purchases and sales of goods. Delmon Poultry Company B.S.C. Common director Purchases. Dar Al Wasat for Publishing and Distribution Common director Purchases. Manama Travel Centre Common director Services received. Mohammad Jalal Group Common director Purchases and sales of goods. Saleh Al Saleh Company W.L.L. Common director Purchases and sales of goods. Ebrahim K Kanoo B.S.C. (c) Common director Purchase of spare parts and services received. Mohamed Ali Zainal Abdulla (MAZA) Common director Purchases and sales of goods. Fakhro Electronics W.L.L. Common director Sales. National Transport Establishment Common director Services received. Budget - Rent a car Common director Services received. Al Ahli Club Common director Sales. Bahrain Cinema Company B.S.C. Common director Sales. Khalid Almoayed and Sons W.L.L. Common director Purchases. BMMI B.S.C. Common director Purchases and sales of goods. The Food Supply Company W.L.L. Common director Sales of goods. BANZ Group B.S.C. (c) Common director Sales. Abdulla Yusif Fakhro and Sons Common director Sales of goods and services received. Bahrain Chamber of Commerce and Industry Common director Sales of goods. Purchase of Other Due from Due to goods and operating related related Sales services income parties parties31 December 2011 BD BD BD BD BD Associated companies 40,563 129,442 164,464 318,393 2,191 Common directors 829,270 998,054 4,813 203,148 403,388 869,833 1,127,496 169,277 521,541 405,579 31 December 2010

Associated companies 52,121 104,417 - 50,549 2,862 Common directors 585,668 1,261,664 752 204,345 378,829 637,789 1,366,081 752 254,894 381,691 Terms and conditions of transactions with related parties Purchases from and sales to related parties are made at normal market prices. Outstanding balances at the year-end arise in the normal course of business, are unsecured, interest free and settlement occurs in cash. For the years ended 31 December 2011 and 31 December 2010, the Group has not recorded any impairment of amounts owed by related parties.




28 RELATED PARTY TRANSACTIONS (continued) Compensation of key management personnel The remuneration of directors and other members of key management personnel during the year was as follows: 2011 2010 BD BD

Short-term benefits 318,958 304,395 Directors’ remuneration 90,000 90,000 Employees’ end of service benefits 17,104 17,889 426,062 412,284 The details of total ownership interest held by the directors at 31 December, along with the entities controlled, jointly controlled or significantly influenced by them, are as follows:

Number of shares held Name Relationship 2011 2010

(i) Ebrahim Mohamed Ali Zainal Chairman 1,873,137 1,873,137 (ii) Yousuf Saleh Al Saleh Vice Chairman 542,227 542,227 (iii) Khalid Abdulrahman Almoayed Director and Executive 471,545 471,545 Committee member (iv) Dr Esam Abdulla Fakhro Director and Executive 1,583,161 1,583,161 Committee member (v) Ibrahim Salahuddin Director 295,809 295,809 (vi) Sami Mohammed Jalal Director 203,901 203,901 (vii) Jehad Yousif Amin Director 450,000 450,000 (viii) Abdul Reda Mohamed Aldaylami Director 250,184 250,184 (ix) Ali Yousuf Abdulrahman Engineer Director 211,075 211,075 (x) Fouad Ibrahim Kanoo Director 149,660 1,046,432 % of shareholding

Name Relationship 2011 2010

(i) Ebrahim Mohamed Ali Zainal Chairman 2.32 2.32(ii) Yousuf Saleh Al Saleh Vice Chairman 0.67 0.67(iii) Khalid Abdulrahman Almoayed Director and Executive 0.58 0.58 Committee member (iv) Dr Esam Abdulla Fakhro Director and Executive 1.96 1.96 Committee member (v) Ibrahim Salahuddin Director 0.37 0.37(vi) Sami Mohammed Jalal Director 0.25 0.25(vii) Jehad Yousif Amin Director 0.56 0.56(viii) Abdul Reda Mohamed Aldaylami Director 0.31 0.31(ix) Ali Yousuf Abdulrahman Engineer Director 0.26 0.26(x) Fouad Ibrahim Kanoo Director 0.19 1.30




29 COMMITMENTS AND CONTINGENCIES (a) Capital expenditure commitments Estimated capital expenditure contracted for at the consolidated statement of financial position date but not provided for, is as

follows:

2011 2010 BD BD

Property, plant and equipment 214,125 145,193 All of the above commitments are expected to be settled within one year. (b) Operating lease commitments - Group as lessee

The Group has entered into commercial leases for land. These leases have remaining terms ranging between 1 year to 8 years and are renewable at the Group’s option. Future minimum rentals payable under operating leases as at 31 December are as follows:

2011 2010 BD BD Within one year 269,806 296,091 After one year but not more than five years 382,920 478,871 More than five years 65,130 68,328 Total operating lease expenditure contracted for at the consolidated statement of financial position date 717,856 843,290 (c) Guarantees: Guarantees in connection with the Group’s trading activities outstanding, as of the year-end, amounted to BD 512,450 (2010:

BD 243,343). The parent company has guaranteed repayment of bank facilities of two of its subsidiaries to a limit of BD 1,562,000 (2010: BD 1,256,000).

30 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES Introduction The Group’s principal financial liabilities comprise term loans, loan from non-controlling interests, import loans, trade and other payables and bank overdrafts. The main purpose of these financial liabilities is to raise finances for the Group’s operations. The Group has trade and other receivables and bank balances and cash that arise directly from its operations. The Group also holds available-for-sale investments. The Group is exposed to market risk, credit risk and liquidity risk. Board of directors The Board of directors is responsible for the overall risk management approach and for approving the risk strategies and principles.

Executive Committee The Executive Committee is responsible for evaluating and approving business and risk strategies, plans and policies of the Group and market and liquidity risks pertaining to the Group’s investment activities by optimising liquidity and maximising returns from the funds available to the Group.




30 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprise three types of risk: interest rate risk, foreign currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include available-for-sale investments, loans and borrowings and trade and other payables.

Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates. The Group is exposed to interest rate risk on its floating interest rate bearing liabilities (bank overdrafts and term loans). The following table demonstrates the sensitivity of the consolidated statement of income to reasonably possible changes in interest rates, with all other variables held constant. The Group’s profit for the year is affected through the impact on floating interest rate bearing term loans and bank overdrafts, as follows: 2011 2010

Increase (decrease) in basis points +100 -100 +100 -100(Decrease) increase in profit [in BD] (63,946) 63,946 (51,414) 51,414

Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in a different currency from the Group’s functional currency). Other than trade payables of BD 94,657 (2010: BD 28,025) due in foreign currencies, mainly Danish Krones, Australian Dollar, Jordanian Dinar and Euros (2010: mainly Danish Krones and Euros), the Group is not exposed to significant currency risk. As the Bahraini Dinar is pegged to the United States (US) Dollar, balances in US Dollars and currencies pegged to the US Dollar are not considered to represent significant currency risk. A 5% change in foreign exchange rates will not have a significant effect on the Group’s performance. Equity price risk Equity price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuer, or factors affecting all instruments traded in the market. The Group manages the equity price risk through diversification and placing limit on individual and total equity instruments. Reports on investment portfolio are submitted to the Executive Committee on a regular basis. The Executive Committee reviews and approves all investment decisions. The following table demonstrates the sensitivity of the cumulative changes in fair value to reasonably possible changes in equity prices, with all other variables held constant. The effect of decreases in the value of equity prices could have an impact on the consolidated statement of income or equity attributable to the Group, depending on whether or not the decline is significant or prolonged. An increase in the value of the equities would only impact equity but would not have an effect on the consolidated statement of income.





Equity price risk (continued) 2011 2010

Change in Effect Effect on Effect Effect on equity on equity profit on equity profit price BD BD BD BDQuoted investments - Bahrain 10% 489,805 - 520,145 - -10% (407,589) (82,216) (475,061) (45,084) - other GCC countries 10% 69,909 - 80,086 - -10% (43,387) (26,522) (64,977) (15,109)Unquoted investments at fair value - equities 10% 200,700 - 150,152 - -10% (200,700) - (150,152) - - funds 10% 94,907 - 21,941 - -10% (57,343) (37,564) (10,293) (11,648) The Group also has unquoted investments carried at cost where the impact of changes in equity prices will only be reflected in the consolidated statement of income when the investment is sold or deemed to be impaired. If the price earnings ratio of the unquoted available-for-sale equities carried at fair value, changes favourably / (unfavourably) by a ratio of +/- 1, it would cause a change in the fair value of the unquoted investment by +/- BD 190,822 (2010: +/- BD 277,359) respectively. Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.

The Group seeks to limit its credit risk with respect to customers by setting credit limits for individual customers and monitoring outstanding receivables on an ongoing basis. The Group sells its products to a large number of wholesalers and retailers. Its 5 largest customers account for 23% of the outstanding trade receivables at 31 December 2011 (2010: 25%). With respect to credit risk arising from the other financial assets of the Group, including cash and cash equivalents, the Group’s exposure to credit risk arises from default of the counterparty. The Group limits this credit risk by dealing only with reputable banks. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets as disclosed in the consolidated statement of financial position.

Liquidity risk Liquidity risk is the risk that an enterprise will have difficulties in meeting its commitments. The Group limits its liquidity risk by ensuring bank facilities are available. The Group’s terms of sale require amounts to be paid within 60 to 90 days of the date of sale. Trade payables are normally settled within 60 to 90 days of the date of purchase/shipment.





Liquidity risk (continued) The table below summarises the maturities of the Group’s financial liabilities at 31 December, based on undiscounted contractual payment dates and current market interest rates. Less than 3 3 to 12 1 to 5 On demand months months years Total2011 BD BD BD BD BD Trade and other payables 726,118 4,131,184 706,973 - 5,564,275 Bank overdrafts - 3,682,276 - - 3,682,276 Term loans - 414,434 1,007,405 1,656,464 3,078,303 Import loans - 4,133,695 215,903 - 4,349,598 Loan from non-controlling interests - - 52,763 718,400 771,163 Total 726,118 12,361,589 1,983,044 2,374,864 17,445,615 Less than 3 3 to 12 1 to 5 On demand months months years Total2010 BD BD BD BD BD Trade and other payables 665,269 3,967,401 1,040,316 - 5,672,986 Bank overdrafts - 3,470,895 - - 3,470,895 Term loans - 295,635 923,370 1,021,547 2,240,552 Import loans - 3,134,941 732,771 - 3,867,712 Loan from non-controlling interests - - 52,763 718,400 771,163 Total 665,269 10,868,872 2,749,220 1,739,947 16,023,308 Capital management The primary objective of the Company’s capital management is to ensure that it maintains a healthy capital base in order to support its business and maximise shareholders’ value. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders and issue new shares.

No changes were made in the objectives, policies or processes during the years ended 31 December 2011 and 31 December 2010. Capital comprises of share capital, share premium, statutory reserve, general reserve, cumulative changes in fair value, retained earnings-distributable, retained earnings-not distributable and proposed appropriations less treasury shares and is measured at BD 20,989,783 at 31 December 2011 (2010: BD 20,414,388).




31 FAIR VALUES OF FINANCIAL INSTRUMENTS

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Financial instruments comprise of financial assets and financial liabilities.

Financial assets comprise of available-for-sale investments, trade and other receivables and bank balances and cash. Financial liabilities comprise of term loans, loan from non-controlling interests, import loans, trade and other payables and bank overdrafts.

The fair values of financial instruments, with the exception of certain available-for-sale investments carried at cost, are not materially different from their carrying values.

FAIR VALUE HIERARCHY

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly

or indirectly; and Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable

market data. For the methods and assumptions used to estimate the fair values of Level 3 available-for-sale unquoted investments, refer to note 12.

Level 1 Level 2 Level 3 Total31 December 2011 BD BD BD BDAssets measured at fair value Available-for-sale investments - Quoted 5,597,138 - - 5,597,138 Available-for-sale investments - Unquoted - 1,047,851 1,908,216 2,956,067 31 December 2010 Assets measured at fair value Available-for-sale investments - Quoted 6,002,309 - - 6,002,309 Available-for-sale investments - Unquoted - 334,132 1,386,797 1,720,929 During the years ended 31 December 2011 and 31 December 2010, there were no transfers between Level 1 and Level 2 fair value measurements, and there are no transfers into or out of Level 3 fair value measurements.




32 SEGMENT REPORTING

For management purposes, the Group is organised into business units based on their products and services and has six reportable operating segments as follows:

Imported foodstuff - Wholesale Import and distribution of foodstuff. Imported foodstuff - Retail Import and distribution of foodstuff through supermarkets. Investments Investment in quoted and unquoted securities (including investments in associates). Dairy products and beverages Production, processing and distribution of dairy products and bottling of water. Fruits and vegetables Import and distribution of fruits, vegetables and other food items.

Storage and logistics Providing of storage and logistics services. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained later in a table, is measured differently from operating profit or loss in the consolidated financial statements. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties. The Group’s geographical segments are based on the location of the Group’s assets. Sales to external customers disclosed in geographical segments are based on the geographical location of its customers.

Segment assets include all operating assets used by a segment and consist primarily of property, plant and equipment, inventories and trade receivables. Whilst the majority of the assets can be directly attributed to individual business segments, the carrying amounts of certain assets used jointly by two or more segments are allocated to the segments on a reasonable basis.

Revenue from operations for the year ended 31 December 2011 in the State of Kuwait amounted to BD 5,219,461 (2010: BD 5,539,226) and Profit for the year ended 31 December 2011 amounted to BD 39,404 (2010: Loss BD 56,377). All remaining revenue and profit for the year is generated from the primary geographical segment in the Kingdom of Bahrain. Total assets in the State of Kuwait amounted to BD 1,121,526 (2010: BD 2,112,316) and total liabilities amounted to BD 1,038,384 (2010: BD 2,020,441). All remaining assets and liabilities arise from the primary geographical segment in the Kingdom of Bahrain.





32 SEGMENT REPORTING (continued)

Imported foodstuff

Wholesale Retail Investments

2011 2010 2011 2010 2011 2010

BD BD BD BD BD BD

Sales - third parties 17,750,890 15,155,989 4,401,347 4,052,334 - -

Sales - inter segments 1,757,464 1,644,146 2,957 5,261 - -

Total sales 19,508,354 16,800,135 4,404,304 4,057,595 - -

Cost of sales (14,298,532) (12,235,417) (3,780,318) (3,477,481) - -

Gross profit 5,209,822 4,564,718 623,986 580,114 - -

Storage income 50,459 - - - - -

Other income 17,338 65,584 41,657 13,348 - -

Other expenses (excluding depreciation

and amortisation) (2,404,978) (2,255,424) (574,763) (576,816) - -

Depreciation and amortisation (134,403) (137,014) (94,789) (90,030) - -

Profit from operations 2,738,238 2,237,864 (3,909) (73,384) - -

Investment income (including share

of results from associates) - - - - 742,748 903,800

Finance costs (254,868) (274,603) (11,417) (3,419) - -

Exchange gains - - - - - -

Impairment of available-for-sale

investments - - - - (139,880) (31,630)

Profit for the year 2,483,370 1,963,261 (15,326) (76,803) 602,868 872,170

Capital expenditure 60,764 615,149 19,927 39,236 - -

Assets 15,164,108 14,874,579 1,146,017 860,292 14,741,558 13,820,181

Liabilities 9,370,540 8,754,545 988,146 887,095 - -




Dairy products and Fruits and Adjustments and

beverages vegetables Storage and logistics eliminations Total

2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

BD BD BD BD BD BD BD BD BD BD

14,556,805 14,835,450 2,983,949 3,256,969 - - - - 39,692,991 37,300,742

66,166 83,451 246,861 288,257 - - (2,073,448) (2,021,115) - -

14,622,971 14,918,901 3,230,810 3,545,226 - - (2,073,448) (2,021,115) 39,692,991 37,300,742

(12,145,408) (11,369,999) (2,772,850) (3,195,627) - - 413,928 453,729 (32,583,180) (29,824,795)

2,477,563 3,548,902 457,960 349,599 - - (1,659,520) (1,567,386) 7,109,811 7,475,947

- - - - 481,672 51,586 (290,603) - 241,528 51,586

176,127 160,585 6,443 10,000 9,497 3,295 (31,396) (22,982) 219,666 229,830

(2,707,782) (2,795,894) (546,114) (603,611) (353,790) (208,386) 324,924 159,253 (6,262,503) (6,280,878)

(88,834) (83,564) (99,785) (108,306) (24,998) (14,452) - - (442,809) (433,366)

(142,926) 830,029 (181,496) (352,318) 112,381 (167,957) (1,656,595) (1,431,115) 865,693 1,043,119

- - - - - - 487,777 280,564 1,230,525 1,184,364

(205,741) (227,036) (44,927) (31,116) (166,672) (128,000) 206,184 173,142 (477,441) (491,032)

71,810 26,000 - - - - - - 71,810 26,000

- - - - - - - - (139,880) (31,630)

(276,857) 628,993 (226,423) (383,434) (54,291) (295,957) (962,634) (977,409) 1,550,707 1,730,821

446,465 236,749 6,340 4,333 28,724 154,654 - - 562,220 1,050,121

11,272,937 10,444,678 2,344,414 2,436,730 5,082,742 5,298,963 (9,414,066) (9,273,493) 40,337,710 38,461,930

7,877,533 6,754,691 1,392,545 1,258,436 4,049,770 5,211,701 (5,635,164) (6,216,230) 18,043,370 16,650,238

At 31 December 2011



33 CORPORATE GOVERNANCE DISCLOSURES

(i) Board, Board Members and Management Board and Directors’ Responsibilities The Board of Directors is accountable to shareholders for the proper and prudent investment and preservation of shareholder interests. The Board’s role and responsibilities include but are not limited to:

- Monitoring the overall business performance - Monitoring Management performance and succession plan for Senior Management - Monitoring conflicts of interest and preventing abusive related party transactions - Accurate preparation of the end of year financial statements - Convening and preparing for the shareholders meetings - Recommend dividend payable to shareholders and ensure its execution - Adapt, implement and monitor compliance with the company’s code of ethics - Review the company’s objectives and policies relating to social responsibilities - Select, interview and appoint Chief Executive Officer and other selected members of the executive management

In this respect, the Directors remain individually and collectively responsible for performing all of the Board of Director’s tasks.

Material transactions requiring board approval The following material transactions require board review, evaluation and approval:

- The company strategy - The Annual Budget - Major resource allocations and capital investments - Management responsibilities and training, development and succession plan for Senior Management.

Election system of directors and termination process Election/ re-election of Board members take place every three years at the meeting of the Shareholders.

Termination of a Board member’s mandate usually occurs by dismissal at the meeting of the Shareholder or by the member’s resignation from the Board of Directors. Directors trading of company shares In September 2011, Mr. Fouad Ibrahim Kanoo transferred 896,772 shares to Faud Kanoo & Sons Holding B.S.C. (closed), which is his family business. This transaction is considered an internal activity within the same family.

Code of conduct and procedures adopted by the Board for monitoring compliance The Board of Directors and the Company’s employees are expected to maintain the highest level of corporate ethics and personal behavior. The Company has established a Code of Conduct which provides an ethical and legal framework for all employees in the conduct of its business. The Code of Conduct defines how the Company relates to its employees, shareholders and the community in which the Company operates.

The Board of Directors has adopted the Trafco Code of Business Conduct and a company Whistleblower Policy to monitor compliance with company ethics. The Code of Conduct provides clear directions on conducting business internationally, interacting with governments, communities, business partners and general workplace behaviour having regard to the best practice of corporate governance models and ethics. The Code of Conduct sets out a behavioural framework for all employees in the context of a wide range of ethical and legal issues. The Code of Conduct is published in the ‘Corporate Governance’ section of the Company’s website.




33 CORPORATE GOVERNANCE DISCLOSURES (continued) (i) Board, Board Members and Management (continued) The following table summarises the information about the profession, business title, experience in years and the qualifications of each of the Executive Management;

Name of executive Designation / Experience member Business title in years Qualification 1 S Sridhar Acting General Manager 26 Fellow Member- Institute of Chartered Accountants of India 2 Sameer Abdulla Asst. General Manager 29 Diploma in Human Resources Alkhan 3 Azzam M A Sales Manager 26 Master’s Degree in Business Moutragi Administration 4 Ali Ramadan Stores Manager 33 - Nasser 5 Hussain A H A HR Manager 42 Diploma in Engineering Buchiri 6 Prasanth P J Purchase Manager 16 Master’s Degree in Business Administration 7 T Soma Rajan Finance Manager 40 Bachelor of Commerce (Hon) 8 P Suresh Menon IT Manager 29 Bachelor of Engineering - Computer Science 9 K Narayanan Catering Manager 31 Bachelor of Arts 10 Sequeira Francisco Maintenance Manager 27 Diploma in Mechanical Engineering & PG Diploma in Production & Maintenance Management The following table summarises the total remuneration paid to members of the executive management BD

Salaries 318,958 Employees’ end of service benefits 17,104 Bonuses 23,271

Total 359,333 The Board of Directors consist of 10 members as of 31 December 2011. The Board has been elected on 15 March 2010 for a period of 3 years.




33 CORPORATE GOVERNANCE DISCLOSURES (continued) (i) Board, Board Members and Management (continued)

The following table summarises the information about the profession, business title, experience in years and start date of the current Board members; Executive/non executive Business independent/ non Experience Start Name of board member Profession title independent in years date

1 Ebrahim Mohamed Ali Zainal Businessman Chairman Non-Executive / 47 1978 Independent 2 Yousuf Saleh Al Saleh Businessman Vice- Non-Executive / 48 1978 Chairman Non-independent

3 Dr. Esam Abdulla Fakhro Businessman Executive Non-Executive / 44 1995 Director Independent 4 Khalid Abdulrahman Almoayed Businessman Executive Non-Executive / 45 1978 Director Independent 5 Abdul Reda Mohamed Aldaylami Businessman Director Non-Executive / 55 1981 Independent 6 Fouad Ibrahim Kanoo Businessman Director Non-Executive / 49 1994 Independent

7 Ali Yousuf Abdulrahman Engineer Businessman Director Non-Executive / 46 1994 Independent 8 Sami Mohammed Jalal Businessman Director Non-Executive / 38 1995 Non-independent 9 Ibrahim Salahuddin Businessman Director Non-Executive / 42 1995 Independent 10 Jehad Yousif Abdulla Amin Businessman Director Non-Executive / 33 1998 Non-independent The following board members had directorship of other boards:

Number of directorships Name of board member in listed companies Ebrahim Mohd Ali Zainal 2 Yousuf Saleh Al Saleh 3 Dr. Esam Abdulla Fakhro 2 Abdul Reda Mohd Aldaylami 1 Ali Yousuf A R Engineer 1 Sami Mohd Jalal 1 Jehad Yousif Amin 4




33 CORPORATE GOVERNANCE DISCLOSURES (continued) (i) Board, Board Members and Management (continued)

During the year ended 31 December 2011, 6 Board meetings were held. The following table summarises the information about Board of Directors meeting dates and attendance of directors at each meeting;

Board meeting and attendance - 2011

Members 20-Jan-11 26-Feb-11 11-May-11 06-Aug-11 12-Nov-11 29-Dec-11

Ebrahim Mohamed Ali Zainal √ √ √ √ √ √

Yousuf Saleh Al Saleh √ √ √ √ X √

Khalid Abdulrahman Almoayed √ √ √ √ X √

Dr. Esam Abdulla Fakhro √ X √ √ √ √

Ibrahim Salahuddin Ahmed √ √ √ √ √ √

Sami Mohammed Jalal √ √ √ √ √ √

Jehad Yousif Abdulla Amin √ √ √ √ √ X

Abdul Reda Mohamed Aldaylami √ √ √ √ √ √

Ali Yousuf Abdulrahman Engineer √ √ √ √ X √

Fouad Ibrahim Kanoo √ √ X √ X √

Remuneration policy The remuneration policy is based on attendance fees and basic fees. The total director fees for the year amounted to BD 11,025.





33 CORPORATE GOVERNANCE DISCLOSURES (continued) (ii) Committees (continued)

The following table summarises the information about Board Committees, their members and objectives; Executive/non -executive independent/ non Board / committee Objective Members -independent Executive/Investment The executive committee is formed 1.Ebrahim Mohamed Non-executive / & Finance/Corporate to discuss matters with the company’s Ali Zainal Independent Governance Committee management regarding senior staffing, financial 2. Yousuf Saleh Al Non-executive / performance, operational performance, strategies Saleh Non-independent and all other issues as directed by the Board. 3. Dr. Esam Abdulla Non-executive / Fakhro Independent 4. Khalid Abdulrahman Non-executive / Almoayed Independent

Audit Committee The audit committee is responsible for: 1. Ibrahim Salahuddin Non-executive / 1) Monitoring the integrity of the Financial Independent Reporting Process, Trafco systems of Internal 2. Sami Mohammed Non-executive / Control, review Financial Statements and Reports, Jalal Non-independent compliance of the board with legal and regulatory 3.Jehad Yousif Amin Non-executive / requirements and the performance of the company’s Non-independent Internal Audit function. 2) To recommend the appointment of External Auditors, agreeing their compensation, overseeing their independence and preparing reports required to be prepared by the committee pursuant to Central Bank of Bahrain, Bahrain Bourse, Bahrain Commercial Companies Law and other regulatory authorities in the Kingdom of Bahrain

During the year ended 31 December 2011, 7 Executive Committee meetings were held. The following table summarises the information about committee meeting dates and attendance of directors at each meeting;

Executive committee meetings and attendance - 2011

Members 13-Jan-11 07-Apr-11 03-Jul-11 25-Jul-11 17-Sep-11 01-Nov-11 22-Dec-11

Ebrahim Mohamed Ali Zainal √ √ √ √ √ √ √

Yousuf Saleh Al Saleh √ √ √ √ √ √ √

Khalid Abdulrahman Almoayed √ √ X X X √ √

Dr. Esam Abdulla Fakhro √ √ √ √ √ √ √

The total remuneration for the executive committee amounted to BD 5,525.

At 31 December 2011




33 CORPORATE GOVERNANCE DISCLOSURES (continued)

(ii) Committees (continued)

During the year ended 31 December 2011, 4 Audit committee meetings were held. The following table summarises the information about committee meeting dates and attendance of directors at each meeting;

Audit committee meetings and attendance - 2011

Members 12-Apr-2011 29-Jun-2011 31-Oct-2011 28-Dec-2011

Ibrahim Salahuddin √ √ √ √

Sami Mohammed Jalal √ √ √ √

Jehad Yousif Abdulla Amin √ √ √ X

The total remuneration for the audit committee amounted to BD 2,400.

(iii) Corporate Governance Corporate governance code The Board and the Company’s employees are expected to maintain the highest level of corporate ethics and personal behaviour. The Company has established a Code of Conduct which provides an ethical and legal framework for all employees in the conduct of its business. The Code of Conduct defines how the Company relates to its employees, shareholders and the community in which the Company operates.

The Board of directors has adopted the Trafco code of Business Conduct and a company Whistleblower policy to monitor compliance with company ethics. The Code of Conduct provides clear directions on conducting business internationally, interacting with governments, communities, business partners and general workplace behaviour having regard to the best practice corporate governance models. The Code of Conduct sets out a behavioural framework for all employees in the context of a wide range of ethical and legal issues. The Code of Conduct is published in the ‘Corporate Governance’ section of the Company’s website. Changes to the Group’s corporate governance guidelines In 2011, Trafco the Group has revisited its corporate governance framework and guidelines to ensure compliance with the Corporate Governance code enacted in 2010. Compliance with the corporate governance code In 2011, Trafco has revisited its corporate governance framework and guidelines to ensure compliance with the Corporate Governance code enacted in 2010. Conflict of interest In 2011, no instances of conflicts of interest have arisen. In the instance of a conflict of interest arising as a result of any business transaction or any type of resolution to be taken, the concerned Board member shall refrain from participating at the discussion of such transaction or resolution to be taken. In this respect, Trafco’s Board members usually inform the Board of a potential conflict of interest prior to the discussion of any transaction or resolution. The concerned Board member(s) also refrain from voting in any instance where a conflict of interest shall arise. Evaluation of Board performance The Annual General Meeting of the Shareholders evaluates on a yearly basis the Board of Directors’ Performance and absolves it from liabilities.

At 31 December 2011




33 CORPORATE GOVERNANCE DISCLOSURES (continued)

(ii) Committees (continued)

Chairman and CEO performance The Chairman and CEO Performance are evaluated by the Board of Directors on yearly basis. Means of communication with shareholders and investors The Company is committed to providing relevant and timely information to its shareholders In accordance with its continuous disclosure obligations under the Corporate Governance Code. Information is communicated to shareholders through the distribution of the Company’s Annual Report and other communications. All releases are posted on the Company’s website and released to the shareholders in a timely manner. The Company Secretary is responsible for communications with the Shareholders and ensuring that the Company meets its continuous disclosure obligations. Management of principal risks and uncertainties faced by the Group The management of principal risks and uncertainties faced by the Group is managed by the Audit Committee and the Board of Directors.

At 31 December 2011

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